Revised guidance for processing medicare claims for QMBs

Keep tracking and reporting Medicare dual-eligible bad debts to avoid lost revenue!

On November 16, 2017 CMS issued revised guidance for processing Medicare claims for a Qualified Medicare Beneficiary (QMB). The purpose for the revisions is to help providers:

• Easily identify QMB beneficiaries
• Remind them that the patient has no Medicare cost-sharing liability; and
• Avoid unallowed balance billing

The QMB indicators will initiate new messages on the remittance advice that reflect the beneficiary’s QMB status and lack of liability for Medicare cost-sharing with three new Remittance Advice Remark Codes (RARC) specific to those enrolled as a QMB:

• N781 – No deductible may be collected as patient is a Medicaid/Qualified Medicare Beneficiary.
• N782 – No coinsurance may be collected as patient is a Medicaid/Qualified Medicare Beneficiary.
• N783 – No co-payment may be collected as patient is a Medicaid/Qualified Medicare Beneficiary.

Medicare Administrative Contractors (MACs) will include a Claim Adjustment Reason Code of 209. Per regulatory or other agreement, the provider cannot collect this amount from the patient. However, this amount may be billed to subsequent payer. Refund to patient if collected. (Use only with Group code OA (Other Adjustment)).

Why should providers care?

In addition to compliance with SNF Rules of Participation with Medicare and Medicaid, there could be significant financial implication for providers. Reimbursement for Medicare bad debts related to QMBs is often under reported (leading to lost revenue) due to:

• Complex CMS rules for bad debt reimbursement;
• Untimely Medicaid claim processing through Medicaid, and the
• Challenge of maintaining required Medicaid remittance advice support in an accessible format. 

Below is a summary of Medicare dual-eligible bad debt statistics, FY 2016, by state.

Source: As filed Medicare SNF cost reports in FY 2016

What should providers plan for?

We’ve identified two potential issues that providers should be aware of:

1. Even though the beneficiary/resident is not liable for co-pays and deductibles, it does not mean providers have no means to recoup some of the costs of providing care. Federal law bars Medicare providers from billing a QMB individual for Medicare Part A and B deductibles, coinsurance, or copayments under any circumstances. The law explicitly allows providers to seek reimbursement for unpaid Medicare deductible and coinsurance amounts as Medicare bad debt related to dual eligible beneficiaries under CMS Pub. 15-1, Chapter 3 of the “Provider Reimbursement Manual (PRM)”. Providers are required to bill the Medicaid program and retain a copy of remittance advice to show the state’s liability for payment.
2. Providers should be mindful of the “pending Medicaid” status while submitting/processing Medicare claims. For a new Medicaid applicant, the application process may take weeks, even months. While the resident is “pending” Medicaid eligibility determination, Medicare would not have any information on that pending status. Thus, the remittance advice for these residents will not reflect their QMB status. Providers need to develop an effective tracking system to correctly determine a resident’s and third-party’s (Medicaid) responsibility, submit a claim to Medicaid post-eligibility approval, and follow the steps described above to maintain Medicare bad debt log and support to be filed with the cost report.

What can BerryDunn do to help?

If you have any specific questions about the information or how it might impact your facility, please contact Tammy Brunetti, Olga Gross-Balzano or Kevin Ware.